Trim tax loopholes, California legislative analyst urges

The L.A. Daily News reports:

California faces an estimated $14 billion budget deficit, but the state's independent fiscal watchdog has an answer - trim some of the tax loopholes that total $50 billion.

Simple idea. Difficult to make happen.

That's because each of the hundreds of tax breaks are important to some interest group, political analysts said, and a few of those loopholes are perceived almost as a constitutional right.

Nevertheless, Legislative Analyst Elizabeth Hill's recommendations on tax breaks - which she says mostly benefit the rich and corporations - are drawing attention.

She has even addressed the largest, seemingly most untouchable tax break: allowing homeowners to deduct mortgage interest off their state personal income taxes.

Hill said in a report that the deduction, which exceeds $5 billion a year, no longer serves its intended purpose of encouraging home ownership. She believes there are more targeted, less costly ways to aid those who need the assistance, without subsidizing wealthy homeowners.

Without commenting on any specific tax break, Senate leader Don Perata, D-Oakland, and Assembly Speaker Fabian Nunez, D-Los Angeles, said Friday the Legislature will consider Hill's recommendations.

And Steve Maviglio, a spokesman for Nunez, said closing tax loopholes - including possibly changing the mortgage interest deduction - will be part of Democrats' broad considerations for deficit solutions.

You'll want to read this one if you own California real estate.